Medicare, Social Security, and Deficits as far as the eye can see

Okay, so this is bad. The Great Recession is whacking years off the life of Medicare and Social Security. Medicare remains the major problem, however. Health care costs are growing so fast that paying for medical services is going to severely damage the federal budget going forward. That’s why Obama is pushing so hard for health care reform this year.

I guess I have a few thoughts:

Budget deficits do matter. (Sorry, Dick Cheney.) Eventually we have to bring the federal budget under control, pay down our debt, and leave us with some borrowing capacity for the next rainy day. (The Great Recession is not the end of history – with any luck.)

Whether or not we get our health care through the government or not, we’re going to have to find a way to pay for it. Or…we won’t – which is why we have tens of millions of people without health insurance coverage. As health costs rise, more Americans will find themselves having to choose between medical care and other purchases. Which, to a certain extent, is okay. How much of your income would you be willing to pay to be healthy? Would you sell your house or forgo a big screen TV or new clothes to live another year? There’s nothing in nature that dictates that we should only spend a set portion of our national income on health care services. But let’s not kid ourselves. This is that dreaded “health care rationing.” And with health care costs rising the way they are, we’re going to get it whether we like it or not – unless we find a way to slow or reverse growing health care costs. But I haven’t seen many magic bullets proposed on that front. Single-payer seems to be the only one, but that has its own trade-offs. It would be nice if we could have a balanced public discussion about this, but that’s not how politics works.

And speaking of politics, I think the conservative arguments against liberal solutions to health care are pretty well understood by the American public. “Just look at those deficits!” they would say. But in my opinion, the downsides of the conservative options are not well understood. I believe conservatives would just like to eliminate Social Security and Medicare (and Medicaid) altogether. But what then do we have? Health care costs will still go up. So more and more people will go without health care, increasing human suffering. And on Social Security, conservatives better be willing to acknowledge that many seniors would see a serious decline in their standard of living without it.

In other words, there are costs on both sides – either in federal budget numbers or in private human declines in living standards and suffering. Neither one is particularly palatable, and that’s what makes solving this problem so serious.

Addition: From the blog “How the World Works.” Andrew Leonard writes about whether we can afford Obama’s agenda. Basically we’re caught between the devil and the deep red ink well. The failure to do something – even if it drives up deficits – might be worse than doing nothing:

Imagine if were looking at 20 percent unemployment, instead of 10 percent. Government revenues would be greatly reduced, while social welfare spending would inevitably be much higher. The Obama bet is that by investing now, we will save later. It’s a hell of a gamble, but not necessarily reckless or spendthrift. It might just be prudent.